5Things to Watch in J.P. Morgan’s Earnings

J.P. Morgan Chase & Co. shocked Wall Street earlier this month with news that Chairman and Chief Executive James Dimon would undergo treatment for throat cancer. Tuesday’s earnings release marks the first time Mr. Dimon is expected to speak publicly since the announcement. As the nation’s largest bank by assets, J.P. Morgan’s own progress will also be closely watched after a somewhat disappointing first quarter. Here are five topics that will be front of mind for investors.

1Dimon's Health

There’s a close eye on anything Mr. Dimon says related to his treatment, which is expected to begin shortly and last for about seven weeks. Who – if anyone — will pick up the slack when he’s taking time off for the treatment? How optimistic are his doctors about the course of treatment and the effects it might have on his ability to keep running J.P. Morgan? Retail chief Gordon Smith and asset management head Mary Erdoes are two of the leading candidates to temporarily fill in should Mr. Dimon need to take a step back in his responsibilities but much is still up in the air depending on how Mr. Dimon’s treatment progresses.

Jamie Dimon

Associated Press

2Trading Business

J.P. Morgan, along with other large banks, has suffered amid a trading slowdown. Chief Financial Officer Marianne Lake said at a June financial conference that the bank may cut pay for some employees if it continues to post lower revenue through 2014. She also said there could be “too much capacity” in the fixed-income area that may lead to cuts in J.P. Morgan’s business.

Marianne Lake

Bloomberg News

3Expenses Down?

Chief Operating Officer Matt Zames is redoubling efforts to find expense savings – no matter how small – across the organization. It is expected to amount to hundreds of millions of dollars, the Wall Street Journal reported this month. J.P. Morgan’s legal spending will also be of interest as it works through a number of government probes, lawsuits and regulatory orders.

J.P. Morgan’s legal spending will be of interest.

4Asset Management

Will Ms. Erdoes maintain her impressive streak with the small but powerful asset management unit of the bank? There’s even more weight on this unit’s performance given she’s in the running to succeed Mr. Dimon. This is also a more stable business that isn’t capital intensive, a key for the bank as it faces regulatory hurdles in other divisions. It has doubled client assets since the beginning of 2006 and notched 20 straight quarters of positive long-term inflows, according to the company.

5Mortgage Rebound?

J.P. Morgan, along with other banks, battled the impact of a fizzling boom in refinancing. But the Mortgage Bankers Association expects a rebound in the second quarter, with an expected 18% growth in originations compared to the first quarter.

Reuters

UPDATE: An earlier version of this post mistakenly said the asset management unit had posted 19 straight quarters of positive long-term inflows. The post has been corrected to show that it’s 20 consecutive quarters.